Title: Major Banking Fraud Allegations Emerge in Bhutan: Phuentsholing Businessman Accused of Double Mortgages and Collusion

Phuentsholing Businessman at the Center of Banking Fraud Scandal

Phuentsholing, Bhutan — In a significant development, the Phuentsholing business community has been shaken by allegations of banking fraud involving large-scale double mortgages and suspected collusion between businessman Phajo Nidup and various financial instituions.

Phajo Nidup: The Suspect

Phajo Nidup, the owner of Choden Transport and Bhutan Ply in Phuentsholing, has found himself at the center of this growing scandal, with suspected irregularities totaling Nu 657 million (approx. $10.5 million USD) and possibly more.

Impacted Financial Institutions

Several major financial institutions, including the Royal Bank of Bhutan (RMA), Bank of Bhutan (BoB), DrukPNB, and Bhutan National Bank (BNB), have reported irregularities. BoB, in particular, has identified Nu 300 million (approx. $4.6 million USD) in double mortgage cases and unauthorized loans.

Allegations of Collusion

Victims have raised serious concerns regarding potential involvement of bank staff and Phuentsholing Thromde in this scandal. While some cases have been reported to the Anti-Corruption Commission (ACC), the Royal Monetary Authority (RMA) is now leading the investigation.

Case Examples

One significant example involves a 5-acre 33-decimal plot in Pekarzhing. In 2011-2018, Menuka Nirola took a Nu 28 million (approx. $420,000 USD) loan from DrukPNB on her land. Upon issues with the loan, she looked to sell the land to Phajo Nidup, who promised to clear her debt by purchasing it. However, Phajo had already sold the land to multiple buyers, leaving them facing difficulties with obtaining Thrams or land documents.

Victims’ Concerns

Victims are frustrated and accuse not only Phajo Nidup but also the Phuentsholing Thromde and banks for failing to identify and prevent double mortgage transactions. They question the lack of checks and balances that allowed these fraudulent activities to occur.

Bank Staff and Phuentsholing Thromde’s Response

The Phuentsholing Thromde Executive Secretary, Lungten Jamtsho, acknowledged the systemic issue, but clarified that he took office after most of these cases occurred. He explained that the banks primarily rely on Thromde to provide plot details, and the Thromde being the land record holder, is responsible for maintaining records of all previous mortgages. However, it remains unclear how these mortgages could have been missed.

Neither the Thromde nor the banks have responded to queries regarding the allegations as of this reporting.

RMA’s Investigation

RMA Deputy Governor, Phajo Dorjee, acknowledged that the CIB did not provide updated or real-time information and that the banks were ultimately responsible for the double mortgage incidents. This fraudulent activity not only leaves many victims in financial limbo but also raises questions about the integrity of the banking system in Bhutan.